Asked about how the bank planned to manage China’s resurgent property market, Mr Zhou said it previously had used adjustments to downpayment ratios and higher mortgage rates for second and third homes.

“These measures will continue to be implemented and some of them will be further strengthened," Mr Zhou said at a press conference on Wednesday. “These are structural policies that we can use to contain property prices."

His comments come as China prepares to complete its once-in-a-decade leadership transition this week. The National People’s Congress is expected to confirm
Xi Jinping
as president on Thursday and the new premier,
Li Keqiang
, on Friday.

They suggest property restrictions will increase this year, as prices soar in the major cities. Earlier this month, the government flagged it would introduce a capital gains tax of up to 20 per cent in some cities. However, few details of the policy have been released.

In a document released before its press conference, the central bank said this year it planned to implement “bilateral local currency settlement agreements". The bank also said it would encourage the development of “innovative bond products" and “interest rate risk management tools".

Mr Zhou has been a strong advocate for reforming China’s tightly controlled financial system. The 65-year-old had been expected to step down this month after a decade at the helm of the central bank, as he has already reached the mandatory retirement age for ministerial level positions in China.

However, the new leadership team has signalled they will keep him on for at least another two years.

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On Monday, he was promoted to deputy chairman of an advisory body to the Chinese parliament, a role that should allow him to remain central bank chief despite his age. He declined to comment on the speculation.

China’s state-run media has been lauding Mr Zhou in recent days, comparing him to former US Federal Reserve governor Alan Greenspan.

The China Business News noted that Mr Zhou had a strong belief in the “market economy" and had begun the process of liberalising interest rates and pushed for the yuan to play a greater role in global trade.

Analysts hope the decision to retain Mr Zhou will speed up reforms in these two areas. Last year, the central bank made two significant moves. In April, it widened the trading band for the yuan against the US dollar to 1 per cent from 0.5 per cent.

And in June, it gave banks greater discretion in setting interest rates. Previously they could offer a 10 per cent discount to the lending rate but that was increased to 30 per cent.

Banks are now also allowed to offer a 30 per cent premium to the benchmark deposit rate.

The Australian government is negotiating a direct currency trading agreement with China to promote greater trade between the two countries.

If successful, Australia will become only the third country to attain such rights, behind the US and Japan.

In November, Mr Zhou said such an agreement was “inevitable" but he did not put a time on ending negotiations.

Mr Zhou became head of the People’s Bank of China in December 2002 and this year will become the longest-serving central bank chief in the G20.

Professor Yu Yongding, a former central bank policy advisor, said the retention of Mr Zhou in his position would bring consistency to the PBOC’s interest rate and currency policy setting.

“The PBOC has done a lot to make exchange rates more flexible under his leadership," said Professor Yu.